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The Scandal of Foreign Labor in Asia

Exploitation, corporate greed, authoritarian hangovers characterize too many labor relationships throughout Asia, but it may be changing The draconian action taken by the Singapore government against striking bus drivers a week ago, expelling 29 of them and charging another five, is emblematic of the treatment foreign labor can expect in most of Asia’s countries, not just the island republic. Another was charged with inciting by posting comments on a Chinese social network site and was jailed for six months after pleading guilty.Some 171 Chinese national bus drivers employed by the Singapore government-controlled transit company SMRT walked off their jobs, claiming they were underpaid relative to other foreign workers doing the same job and forced to live in poorly sanitized barracks, in what has been called the first strike in Singapore since 1986.

The dispute had its origins in a new work contract imposed on the workers in July, which raised the weekly wage of drivers by S$25 but at the same time it also raised the hours of work.

The recalculated ratio of pay to wages actually cut the rate per hour.The SMRT case is no surprise for those who know how the foreign labor industry works in the island republic and in fact across much of Southeast Asia.

The dispute is indicative of a much larger chronic problem.

The pay and conditions of foreign workers throughout the region have been poor to say the least.To date, foreign worker supply has generally been plentiful and workers are seen as a resource where the maximum should be extracted out of them for the minimum expenditure possible.

This is extremely common within local companies. Many stories abound of harsh treatment, poor management, abuse, and generally poor working conditions.Most foreign workers have already paid agents up to US$10,000, mostly borrowed for the privilege of working abroad.

There are many cases of workers being cheated out of their salaries by greedy and unscrupulous employers. Just within the last few days the Indonesian embassy in Kuala Lumpur warned its nationals not to work as maids in Malaysia due to the abuses many have endured over the years with very few rights of recourse.In fact under Malaysian immigration law, any misuse of workers outside of their visa conditions renders the workers liable, rather than the employers.

There are cases where foreign workers have been jailed and caned over employer misdeeds.The trauma facing many foreign workers starts not with the employers but with recruitment agents who extract as much as they can before the workers ever leave their home countries. Many deposits are taken from villagers in northeastern Thailand, Laos and Cambodia with the promise of foreign work that never comes. Some agents even issue false documents, as happened in Nepal a few years ago where a recruitment agent sent workers to Malaysia on false visas.

The culprits couldn't be caught and prosecuted as they were "operating outside the jurisdiction of Malaysian authorities." However the workers themselves were arrested for possessing forged visas. Very few of these recruiting agents are ever prosecuted.The recruitment business is so lucrative and generally outside the taxation system that it has attracted officers of government agencies and even members of parliament. Just recently labor activist Abdul Aziz Ismail accused the Malaysian Attorney-General's chambers of colluding with the Bangladesh High Commission in aiding foreign labor recruitment agencies.In addition a former minister, Mohd Radzi Sheikh Ahmad and a sitting MP, is listed in Companies Commission of Malaysia (CCM) records as a company director of SNT Universal Corporation Sdn. Bhd., which has been accused of exploiting Bangladeshi workers.

The former inspector-general of the Royal Malaysian Police Force has also criticized the way the government handles foreign labor as little more than human trafficking.This brings up the next issue of old authoritarian hangovers in the practices and processes of handling foreign workers. Foreign workers travelling to Malaysia, Singapore and now Thailand specifically come to work for an employer on a short term basis and return home after a specific contracted period.Until very recently, most workers were poorly educated and subservient to their employers, just wanting to make as much money as possible and return home. Foreign labor was seen as a necessity of nation building, particularly when the Asian economies were rapidly growing with construction and manufacturing. Foreign labor also took up the jobs that locals didn't want and thus performed a specific service, enabling national growth and development.Governments have viewed foreign workers as cheap labor in their country for the greater good.

This can be seen in the neo-Confucian nature of the Singapore government in doing things for the greater good while forsaking individual rights. Foreign workers are at the bottom of a feudal pecking order, the lowest in society to do what others don't want to do. Consequently governments have given them very few rights, as there until recently has been little pressure to do so.In Thailand, where there are an estimated 2 million-plus foreign workers, mainly unskilled workers from Burma and Cambodia, some provincial officials will not even allow them to celebrate certain cultural activities.The embassies of supplier countries seem to be involved in the supply chain and the issue has not been highlighted to human rights forums internationally, although Phil Robertson, Deputy Asia Director of Human Rights Watch, criticizes Singapore for defying basic human rights for criminalizing migrant workers actions by taking industrial action. He adds that Singapore discriminates between different races when it comes to workers pay and conditions. Foreign workers have few, if any reasonable legal rights in any of the countries within the region, and often suffer the penalties dished out from mistakes their employers and recruiters make.The demographics of the workers themselves are changing. Foreign workers today are much more educated than their counterparts of just a few years ago.

They are more likely to come from farther afield than traditional sources like Indonesia and Thailand. And as with the Chinese bus drivers in Singapore, they are capable of using technology – the ubiquitous Internet – to warn their peers both in the host country and at home, and are becoming more aggressive about their rights than before, as domestic helpers in Hong Kong have led the way with demonstrations, caucuses and lawsuits.It is unknown whether Filipina maids, who have been in Hong Kong for decades, are the harbingers of change. But it may be that somewhere down the road a more professional approach will be required on the part of employing companies, which must realize that their bargaining power over foreign workers will weaken. Malaysia and Singapore have already lost attractiveness as places to work.Foreign labor practices are an embarrassment to the region.

They show that many local firms still have immature management, particularly in the HR area and have a long way to go until they can claim to be run as well as those in developed countries, making a mockery of any CSR in the region and if not attended to soon could become a deep impediment to the region’s competitive advantage in international trade.The foreign worker issue shows the world the ugly side of Asia as a region of deep exploitation. Yet the foreign recruitment agencies have been of great advantage to governments.

This issue is rarely brought up at international forums, and all parties seem to prefer to sweep these injustices under the carpet. Southeast Asian governments are very hesitant to regulate and control the sector.The SMRT strike has brought these matters into the public arena. Further cases of worker exploitation surfacing in the press can be expected to affect the reputations of governments, officials, and firms involved in these rackets. Southeast Asian governments and employers must learn that nothing is forever and move from the 19th to the 21st century.   Rights:Copyright © 2005 - 2012 Asia Sentinel.

China Accuses Foreign Media Over Wen

Equality is supposed to be a goal for communist nations. But China’s experience raises serious questions about that assumption. A New York Times report reveals that the family of Chinese Premier Wen Jiabao is worth nearly $3 billion and has many analysts and Chinese scratching their heads. Wen’s personal wealth was not detailed, and he has a reputation for supporting reforms to reduce corruption.

The newspaper revelation has brought down wrath of censors with Chinese officials blaming the media of slander with ulterior motives. Chinese censors have also blocked news reports and online searches for the Times and Wen. “The drastic response underlines how vulnerable the Communist party feels as it prepares to transfer power to the next generation of leaders at a key congress in just two weeks amid internal strife, growing clamour for reform and criticism of corruption,” reports Kathrin Hille for the Financial Times.

The Times report suggests that the family profited from investments in state companies and state support for family firms. Political leaders can enrich themselves by aligning investments with their policies, and family members can also anticipate policy moves. – YaleGlobal Leaders who support common good are rare birds; troublemakers or truth-tellers, foreign press point to great wealth of China’s leaders and their families Kathrin Hille The Financial Times, 26 October 2012 Rights:Copyright © The Financial Times Ltd 2012.

China’s Purchase of US Fracking Firm Comes With Advanced Technology

With the US presidential election on Tuesday, both candidates vow a get-tough approach on China, the need for reducing the federal deficit, and more drilling for natural oil and gas in US borders. With so much encouragement from political leaders, hydraulic fracturing to extract oil and gas is highly competitive in the US and profits are in decline. So many holders of oil and gas leases hope to unload their properties, and China is waiting in line. China’s Lanzhou Haimo Technologies Co has expressed interest in buying a stake in Texas-based Carrizo Oil & Gas. Under the deal, the Chinse firm would acquire 6000 acres with infrastructure, reports John Daly for OilPrice.com. He argues that the intention behind the purchase is not the small bit of fuel, but rather to access infrastructure and technology.

The US is a leader in hydraulic fracking and China wants to follow the US lead in this area. China has an insatiable demand for fossil fuels, which continues to drive demand and hike global energy prices. Daly reports that he expects the sale to be approved with few questions asked. – YaleGlobal Competition in energy sector has reduced profits; companies with US oil and gas leases want to dump holdings – and advanced technology – onto China John Daly OilPrice.com, 5 November 2012 Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European Studies, University of London. While at the Central Asia-Caucasus Institute at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies, where he is currently a non-resident scholar, in 199 he founded The Cyber-Caravan, which continues today under the title, The Central Asia-Caucasus Analyst. He subsequently served as Director of Programs at the Middle East Institute in Washington DC before joining UPI as International Correspondent.

Rights:© 2012 OilPrice.com

Widgets From Beijing

Is China trying to exploit open economies of the West to build a technological and military superpower? After the Wall Street crash in 2008, there was great fear about the rise of trade protectionism. Fortunately, that fear did not materialise, but new kinds of barriers have appeared.

The source of the fear is that China is attempting to exploit open economies of the West to build a dominant technological and military power. Last week, a US Congressional committee issued warning against doing business with two leading Chinese telecom companies. Similar actions against the same companies by Canada and Australia and expressions of concern by the European Union underline their common concern about China.

The deep ideological cleavage between the ambitious Communist Party-led China and liberal democracies highlights the fault line running across an increasingly globalised world.

There have been cases where countries have held up or even scuttled business deals seen as harmful for national security. India, for example, took a while to grant permission to Huawei to set up operations. In 2009, Australia stopped the Chinese acquisition of a major mining firm on national security grounds; the US has warned Sprint against joint ventures with Huawei and most recently blocked acquisition by a Chinese firm of wind turbine projects close to an airbase. Last week, the House Permanent Select Committee on Intelligence issued a report warning companies against working with Huawei and ZTE on the grounds of threat to national security.

The chairman of the committee, Mike Rogers, bluntly said, “if you care about your intellectual property, if you care about your consumers’ privacy, and you care about the national security of the United States of America”, look for other partners than Huawei. China has denounced the report as a groundless charge by a biased body, but American companies will now think twice before inking a deal. Founded by a former Chinese army major, Huawei has emerged as a technology giant , a world leader in 4G technology, with operations in 150 countries and revenues of $32.4 billion. Given the success of the company, which a former US official ascribes to “steady, extensive support from the Chinese government” and to “industrial espionage”, and its critical role in information infrastructure, Huawei has long been viewed with suspicion. In a bid to enter the US market in a big way, Huawei wanted to clear its name and asked the Congress to investigate it and offered full cooperation.

The result has not been what Huawei had hoped for. Although the unclassified part of the committee report did not provide any evidence of espionage except a hint that Huawei may have used routers to provide backdoor entry to Chinese intelligence services.

The visit to Huawei offices in China and interviews with officials have not allayed their suspicions.

The report criticised the firm for not revealing its management structure, relations with the Chinese government, People’s Liberation Army and the Communist Party (which maintains an office right inside the headquarters in Shenzhen) or even their reluctance to provide a list of their large shareholders.

The fact that Canada and Australia have barred Huawei, and after granting contracts to the company, Britain has taken special measures to protect its communications infrastructure is bad news for Huawei. Coming on the heels of accusations by western governments that China-based hackers have repeatedly and systematically targeted their sensitive military and intelligence networks, the report has reinforced concern.

Recent cases of industrial espionage in the US (six out of seven by Chinese nationals) also point to the government’s role. Given the key role of a technology giant such as Huawei in furthering China’s strategic interest, the case is bound to chill its trade ties with the West. Cisco, a major US rival, is likely to face retaliatory action in China, and Beijing could hurt by restricting sales of semiconductors, the bulk of which power US electronic devices.

The interdependence between China and the West inevitably makes action against a major company problematic. ZTE, which strongly denied the charge, also pointed out that “most or all US telecom equipment is made in China, including that provided by western vendors”. Huawei imports $6 billion a year in components from the US and is indirectly responsible for the employment of 35,000 Americans. In fact, the silence of major US technology firms on the Huawei report is a telling commentary about their dilemma.

They fear Huawei, but worry about losing the China market.   The author is director of publications at the Yale Center for the Study of Globalisation and Editor of YaleGlobal Online.Rights:ABP Pvt Ltd Publication Copyright © All rights reserved.

Glut of Solar Panels Poses a New Threat to China

With world demand for alternative energies on the rise, China rose to the challenge. But an oversupply, price war and struggle to repay low-rate, government-guaranteed loans is adding to China’s financial woes, reports Keith Bradsher for the New York Times: “Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy,” he writes. “The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.” Banks, not ready to cut their losses, continue lending money, and local governments want to protect jobs. Manufacturers blame anti-dumping penalties from the US and Europe. One analyst told Bradsher the problem is Chinese eagerness to rush into new industries. One ray of good news: China has cut solar energy costs by two-thirds. – YaleGlobal Eagerness to dominate new technology and subsidized loans, government-guaranteed, contributed to overcapacity that could kill China’s solar-panel industry Keith Bradsher The New York Times, 5 October 2012 Rights:Copyright © 2012 The New York Times Company

New Naval app secretly recreates environments from your phone

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The New Barons of Bordeaux

CAMPIAN, BORDEAUX: Deep in the Bordeaux countryside, Chateau du Grand Moueys is a sprawling 170-hectare expanse of vineyards and forest. At its center, a neo-gothic castle with turrets and crenellated walls, bring to mind a medieval world of knights and romance. Seated within the chateau’s genteelly dilapidated dining room, the estate’s new owner, 49-year-old Chinese entrepreneur Zhang Jin Shan, chomps forlornly, on a croissant and contemplates how to revive the vineyard. Globalization has created new challenges for the French wine industry. Once secure in their supremacy, French vineyards now must compete with less expensive New World wines, at a time of declining demand from austerity-parched developed markets. I ask Zhang how he’s been enjoying the local French food. “Hai xing,” he replies with a shrug, using a Chinese phrase that signifies faintest approval. “I’ve got used to it.” Aline Moineau, the chateau’s longstanding manager, purses her lips tightly. Zhang doesn’t appear to notice and perks up talking about a luxurious 50-seat Chinese restaurant, the piece-de-resistance of the high-end hotel and spa that he plans for the premises. A clash of culture is obvious, feeding into larger resentments across Europe at China’s rising clout. I ask if a French restaurant would make more sense in a chateau? “No,” he answers emphatically. “In France there are many French restaurants, but very few Chinese ones.

The guests in my hotel will mostly be Chinese, and the fact that they can find good food here will be attractive for them.” “But perhaps they would want to try French food?” interjects Moineau. “Please, let Mr. Zhang talk with the journalist first, and ask your questions later,” snaps Sophie, the Chinese woman who serves as Zhang’s French interpreter.

The clash of culture is obvious, one that feeds into larger resentments across Europe at China’s rising clout and investments in the economically floundering continent. On the one hand, Europe welcomes Chinese riding to the rescue of distressed assets, but investors are focused on making profits. Inevitably Chinese consumers are influencing trends in taste, a development that’s not always to the liking of locals. Chinese investments in Europe are still small but growing at a heightened pace. In 2011 the Chinese invested $10 billion in the crisis-hit region, triple the amount of a year earlier, according to a study by economic consultancy Rhodium Group and the Chinese bank CICC. Chinese investors have been buying car companies, solar-panel producers and chemical plants among other acquisitions, prompting the European Council on Foreign Relations, a think tank, to publish a report titled “The Scramble for Europe,” drawing parallels between the European colonization of Africa in the 19th century and China’s current activity in Europe. While such declarations may be overblown, rocketing figures for wine consumption in the Chinese mainland, combined with the reputation enjoyed by Bordeaux wines have made owning a vineyard, or two, an increasingly attractive proposition. China is not a traditional wine-drinking nation. Still, in 2011 it surpassed the United Kingdom to become the fifth largest consumer of wine by volume, according to the International Wine and Spirits Research group.

The mainland’s wine market has experienced more than 20 percent growth every year since 2006, and around 20 percent of Bordeaux’s exports are now destined for China. China, not traditional wine-drinking nation, surpassed the UK to become fifth largest consumer of wine. Purchases by Chinese in Bordeaux began in 2008, when a trading company from Qingdao bought Chateau Latour Laguens, a 30-hectare vineyard. By 2011, more prestigious estates like Chateau Laulan Ducos, classified as a Cru Bourgeois, began passing into Chinese hands. Another significant acquisition in 2011 was the €10 million deal whereby COFCO, a state-owned oil and food giant, became owner of Chateau Viaud. During the Bordeaux en primeur tastings in 2011, when thousands of wine professionals from across the world travelled to the region to assess the year’s offerings, the estates offered vintage reports in three languages – French, English and Chinese. Bordeaux winemakers also recently published a recipe book pairing wines with Chinese dishes, suggesting, for example, a Saint-Emillon for pig’s feet. When Zhang bought Chateau du Grand Moueys earlier this year, it had been languishing on the market for five years.

The previous owners, the aristocratic Bomer family from Germany, had been hard pressed to find takers for the Chateau’s €12 million price tag. Although the final price is undisclosed, Zhang’s French staff say he paid a “fair price.” Karine Lemaitre, Chateau du Grand Moueys’ oenologue in charge of wine production, is excited about the possibilities of Zhang’s investment. But although Lemaitre is eager to experiment, she recognizes the challenges of foreign ownership – the biggest being the inability to communicate directly with Zhang.

The only French he can muster is a barely recognizable, if enthusiastic,  “oui!” Much is lost in translation, the local staff complain about the linguistic abilities of his translator and, as a result, decisions are delayed.  Zhang may be a newcomer to the world of French wines, but is not new to beverages. As head of the Ningxiahong group, he’s China’s emperor of goji berry drinks. Goji, a small red berry, has a long history of medicinal uses in China. Ningxiahong produces 30 million bottles of goji alcohol annually. Like many Chinese entrepreneurs of his generation, he’s a self-made man. He was born in 1963, a few years before the start of the Cultural Revolution, in an obscure town in one of China’s poorest provinces, Ningxia. His mother tilled the fields, while his father worked with the local railways. Chinese acquisitions of French vineyards have thus far been small or middling estates. Zhang didn’t attend university. Instead, armed with a technical diploma he landed an accounting job with a state-owned enterprise in 1983. By 1996 he’d made the leap to running a baijiu factory and making the popular Chinese spirit. In 2000, he bought Ningxiahong, a company active in real estate, printing, catering and travel, in addition to the goji business. Zhang has witnessed the opportunities that come with change. He’s dismissive about the wine produced at Chateau du Grand Moueys: The quality is mediocre, the packaging “low class.” A Paris-based designer has been pressed into service to redesign the bottles, adding red corks and gold lettering. Lemaitre, the oenologue, notes that similar redesigns are underway at other estates owned by Chinese in the region: “There is some kind of bandwagon effect. Everyone wants a certain kind of packaging and has the same plans. Buy a vineyard with a nice chateau, divert all the wine produced to China, and set up a hotel on the estate.” Chinese acquisitions of French vineyards have thus far been small or middling estates.

The mighty Grand Cru, the most prestigious of wine classifications, has eluded investors from the mainland.

To put the investments in perspective, only an estimated 20 estates out of about 9000 in Bordeaux are in Chinese hands. But Zhang dreams big and has plans to acquire a Grand Cru label “like Chateau Lafite” within the next decade. “When I was a child, I couldn’t even dream of going to a city like Beijing,” he chuckles. He waves his hand at the chateau’s airy interiors. “All this,” he says, “It makes me feel like a prince.” It’s not yet clear how profitable these Chinese investments will be, going forward.

Regardless, red and gold bottling, luxury Chinese restaurants in the countryside, and millions of bottles of French wine consumed by Chinese people as they dig into a supper of chicken feet a la mode, are bound to transform the hallowed French landscape of Bordeaux as much as its trading fortunes.  

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